All Forum Posts by: James Carlson

@Brandon Gale

I think @Noah Wright's response is great. 

I tell our STR and Airbnb investors in Colorado that the audience for a response is not the just-departed guest at all. Your only audience is future guests. 

With that in mind, use the response to showcase how reasonable and responsive you are. Acknowledge their trouble and express interest in correcting any issues for future guests.

I'd say there's room for some pushback. If they didn't respond kindly to sincere attempts to fix the problem, I'd mention your attempts. But keep it short. Don't get into the weeds.

Quote from @Hannah Tate:

All, I am looking for some advice from anyone who has had experience investing in short term vacation rentals internationally. I have a lot I have purchased in Cancun and am needing to submit plans for the construction of the home itself fairly soon and am like a fish out of water. I live in the US and some of the questions I have involve lending options to help me out with the construction loan and approaches to managing the property as a short-term vacation rental. I would love to hear any advice or suggestions on how to proceed...

We just closed on a place in Puerto Vallarta. We've only ever owned in the cities we've lived -- Denver and Colorado Springs. We just skipped over the out-of-state investing part and went straight to out-of-country. 

Not going to be of any help for you about submitting plans; we bought a new build condo. But I'm interested in any answers. 

Just be sure to tell your carrier exactly what you're doing. (Trying to skimp on coverage by not telling them you're Airbnb-ing the place will defeat the purpose of insurance if they deny a claim because you weren't truthful.)

There are specific STR insurance carriers like Proper Insurance, but most major carriers offer a rider for vacation rental or short-term rental insurance as well.

You'll get different opinions on whether $1M liability is enough. No one has the "right" answer. It's just how do you personally weigh paying more for less risk on the back end. 

Oh, and check your city's STR regulations. A) Just make sure you can do Airbnb in a non-owner occupied property. (Airbnb laws are a total patchwork city-to-city here in Colorado.) And B) most STR regulations have a requirement for how much liability insurance you have to carry.

Good luck!

@Bruce Tieu

Denver's about as good a medium-term rental market as there is. You've got to know that rents are down across the board all over the country -- be it LTR, MTR or STR. Don't let that discourage you. It's just cyclical.

What makes a good midterm rental in Denver (or Colorado Springs or just about any city)? Great design, professional photographs, great location.

Don't get hung up on micromarkets or submarkets. People are coming to Denver for all kinds of reasons. Remote work, travel nursing, school. Our MTR in the Capitol Hill area has been filled with every kind of tenant, so don't get bogged down trying to target some niche.

All of these groups of people have chosen a more nomadic life because they want to experience different cities. So MTRs that are close to the "action" are great.

Also, I think the MTR market is getting more and more like Airbnb in Denver and Colorado, in that it's not an amateur's game. You've got to professionalize your place. The design and furnishings need to be solid and photographs have be plentiful and professional. 

In terms of running numbers, I find that using Rentometer's LTR estimate for your location plus 30% is a good number for right now. Our MTRs in Denver and Colorado Springs fluctuate between 1.2x and 1.4x the long-term rents. 

Good luck!

@Ruth Reyes

I'll be the outlier here and say a condo can be a good buy. If it's what you can afford, it's a solid building with a good HOA and financial situation, a condo can be a great buy. Especially if it's a first one.

Our first three purchases were condos in the downtown Denver area. We still have one of them, and it's been awesome for us. I hear what everyone above says about HOA fees and such, and that's true, but ...

Condos are also waaay less work. There's no roof or sewer for you to manage. Exterior maintenance and yard work are usually handled by someone else. There's no absolutes in real estate, and if you're weighing your priorities and not doing a bunch of work yourself is a priority, a condo can start to look real good.

@Zach Rothman

Totally. I have an STR investor who owns in Florissant outside of Woodland Park/Colorado Springs. AirDNA projected $50k for their place. They designed the hell out of it, added a hot tub, and they're averaging $80k for the first two years.

I see this over and over. Well-designed short-term rentals in Colorado outperform their similar vacation rentals that aren't designed by 20% or more. 

If the stock market were real estate, you'd pay for 5 shares of Apple stock and get an additional 95 shares. The additional shares would be paid off by someone else over 15 or 30 years, and when you own the full 100 shares, you can sell it get all the equity that someone else paid for plus all the growth in value.

So yeah, I like real estate. 

Quote from @Gavin Snowhite:

Hi I’m 20 years old and I have recently started learning about investing in rental properties. ... I am worried that my property expenses will leave me in the red because of the current costly housing market.

Yes, what @Marcus Auerbach said. 

There's no magic line of "good" or "bad" house hacking. The goal is to offset your mortgage the best you can. If you can cash flow, then amazing, but more likely you'll cover some or most of your expenses. 

In Denver and Colorado Springs, our house-hacking clients can usually get rents equaling around 75% of the monthly payment. That's still a huge win. You'll pay less than you would have renting, and you save the money you would have spent renting and put that toward the next house. 

Quote from @John Underwood:

Quote from @James Carlson:

Quote from @Koren Lavi:

 My LTR income has provided the cashflow to quit my job as an electrical engineer.  

My STRs are just for fun and are true vacation destination rentals.

 That's awesome, John. When did you buy your properties? With prices where they're at and rates still relatively high (even with the recent drops), I don't see LTRs anywhere in Colorado cash-flowing in a meaningful way. 

Quote from @Koren Lavi:

 North Denver in Adams County. I do fortunately have room to absorb that loss, but with increased taxes, insurance, and maintenance/repairs starting to get reeeeally thin on the margins 😬

Yeah, I hear that.

For me, real estate has always been a long-term game. Even the modest 4% annual appreciation equals wealth gains far above any monthly cash I can make on a rental. So whatever I can do to keep my Denver and Colorado Springs properties while they appreciate in value -- be it STR or MTR -- is what I focus on. 

For some people, cash flow is the cake, appreciation is the icing. For me, it's the opposite.